The Game with Alex Hormozi - Picking Your Niche | Ep 374

Episode Date: March 15, 2022

You will never make it by taking shortcuts. Today, Alex (@AlexHormozi) talks about how to pick your niche when creating a business, the importance of putting the time and effort into that niche, and the why taking the easy route is never the answer to success.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps(1:27) - Wrong idea: picking niche without knowledge about it(5:34) - Difficult to pick niche without experience or doing something(8:41) - Career built on foundation, skipping steps leads nowhere(11:09) - Time and effort in growing business or niche is importantFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

A lot of times new businesses are not actually really new. There's slight iterations on things that are old. Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. In this video, I'm going to walk you through the best way, in my opinion, to pick the niche that you're going to focus on to start your business. So I asked my Instagram, you know, what are some of the questions that you have. And this one came up a lot, which is like, how do I pick my customer?

How do I pick the niche? like what's the process, et cetera. And so I've seen my book, this guy, it's 99 cents on Amazon. For those of you guys, you don't know, we're like, it's not 99 cents. The Kindle is 99 cents because it's digital, the hard copy. Amazon changes the prices, but you can get a hardback or you can get the digital one for 99 cents because that's the lowest they would let me sell for. All right.

Anywho, so picking the niche, I think this is something that's like wildly misunderstood, and I'll tell you where most people get wrong, is that they pick a niche and they have no idea. about the niche. All right. And so Y Combinator, which is a venture, it's like an incubator type thing in Silicon Valley, they have their things that they look for when they're investing businesses and they're accepting them into YC. And one of the ones that was really interesting to me is that they look for past experience within the space. And because I think a big part of that is that a lot of times new businesses are not actually really new, there's slight iterations on things that are old, right? And candidly, within my own business experience, I don't even do

anything new. I just try and do stuff better, which people somehow poo on. It's like, you can go into dry cleaning and do it better than everybody else and still win. Like, you go into lawn care and do it better than everyone else and still win. And I think that's wildly underrated, because you will 100% make money if you just try hard and know how to do business. You don't need anything new, right? And so, like, I think that is a wildly underestimated component of having strategy and business is just like how do how am i get the use the value equation in the book like how i'm going to provide more value to my customers than anyone else can um but like the actual industry itself that you're serving doesn't need to be new or different right um so that being

said like service with a smile while they underrated but the the piece that i want to hit on here is that like i'll tell you this story because i think it really drives this point home so in allen our software company that we recently sold a majority stake in um one of the agency owners uh you know for nine months was just like never making progress right like was always hopping on was always having issues and he was like his clients were getting results and he was like how do we get around that and i was like you don't you need to fix that and um it got to the point where i just said listen man like you don't know what you're doing which is why your clients are getting results period he's like well i've got this one guy who does you who makes all this money using our you know using the leads that we get

him and i was like okay well why is he getting making money the other ones aren't he's like well i don't know and i was like right so that's not because of you that's because of him And so what I told him to do, which was wild at the time, I said, I need you, I think that you should close your agency. I was like, I don't think you know anything about real estate. I said, I think that if you know how to get real estate leads, then you should go get your realtor's license, go generate your own leads, and go build a real estate business and learn it. And then once you have succeeded in doing that, then if you want to, then go make the agency and show other people how to do it because you've actually done it. And so there's a tweet by Lila, my wife, she said, like, stop listening to people on the sidelines about like, sorry, stop listening to people about how to play the game who've never been anywhere but the sidelines, right? And the problem is too many of the people who are watching this right now, y'all are on the sidelines and have always been on the sidelines and are trying to pick a niche to get into to sell how to do the niche.

Well, that's dumb. You've never done it. So a lot of times people are trying to skip to a higher leverage opportunity without having done the requisite work of understanding the niche, which is why the Y Combinator people look for like if you want to make a software in the payment space, we'd love to see that you have experience in the payment space because there's so much stuff that you don't know that you know when you actually spend three, five, you know, years doing something in an industry. You understand the lingo. You understand the avatar. You understand the problems. And you can see opportunities if you have an entrepreneurial hat on. There's always problems in every industry, which means there's there's always opportunity. And fundamentally, business is just solving problems that exist and making sure the math makes sense. Like, that's literally it. It's like, where is there a problem? How much do they think this is a problem?

And is there a way that I can solve it and charge for it? That's it. Like, that's really all the business is, right? And so, and really how well you solve the problem is going to dictate how much virality your business has, because if you solve it really well, people will tell people and you will, and your business will grow out, right? I think the problem that a lot of people have is they didn't know how to make an offer. It's the fundamental thing that is the beginning of building of businesses.

You've got to know what you're selling, right? And so that was a problem for a lot of people. And then people got that problem solved and then they told their friends and books sold 100,000 copies in six months with no promotion, right? And so I'm only, I'm sharing this because I couldn't write a book on offers without having made a ton of offers. And I feel like there's too often people who are trying to focus on a niche who've never actually done the thing in the niche.

And this is really, really rampant in the internet space because everyone's trying to take a shortcut to get there when they realize like when I'm telling you right now you're never going to get there because you're not good enough like you're never going to get there because you're not good enough you have to do the rocky cutscene you have to eat the shit for a period of time so that you can get the reps in so you can put your time under the bar in so that you can actually get good and before you are good you will suck and you have to accept long period of sucking and you do enough volume that eventually you'll suck so little that you'll actually be good and then at that point then you'll actually have a real decision to make which is I'm actually really good at this thing now that I've learned

teach it to other people or just want to do more of the thing that I'm doing. Right? Because like a realtor can then just grow a team of 100 realtors and own the entire thing, which is what I'd recommend this guy do, right, rather than have an agency. Real quick, guys, if you can think about how you found this podcast, somebody probably tweeted it, told you about it, shared it on Instagram or something like that. The only way this grows is through word of mouth. And so I don't run ads.

I don't do sponsorships. I don't sell anything. My only ask is that you continue to pay it forward to whoever showed you or however you found out about this podcast that you do the exact same thing. So if it was a review, if it was a post, if you do that, it would mean the world to me, and you'll throw some good karma out there for another entrepreneur. That doesn't, right? And so this is kind of where I think the problem is, is that, like, I had another question

that was sent to me on Instagram, which is like, hey, how do I soft turn? Because a lot of my clients are getting results. And I'm like, well, duh. He said, he said, how do I sell from $10,000 or $100,000 a month when I don't have a lot of testimonials? I was like, you're not good at the thing that you're supposed to be good at. That's why I don't have testimonials is why you're not going a hundred thousand dollars a month. Like, he's making the goal a hundred thousand dollars a month rather than being good.

I have no words. I have no words. I don't get it. You know what I mean? Like everyone's in such a fucking rush that you will never get there. It is the slowest path to getting there is to fool yourself and the thinking that you're good something that you're not. You have to go and pull the thread and say which and the thing is just like, well, do what you're passionate about. Whatever.

You're not going to be passionate about stuff that you suck at it. What you have to do is like which of these opportunities. seem like they potentially have high leverage, right? And I'm going to learn from the bottom, right? It's like one of the best ways to learn stuff is starting at the bottom, not because it's the only option, but because if you understand the entire pathway of a client journey or of an industry journey,

then you will have more trench knowledge, more depth of experience that you will be then able to apply. Right? Like people see my, you know, videos on personal finance, people see videos of mine on sales, People see videos online recruiting. People see videos of mine of marketing. And it's like, how did you acquire all these skills? It's not like because I tried to jump to the spot that I'm at.

And then like, you can't skip. You can't skip. Like there's a sequence. Buildings are built with foundations. And your career is a pyramid. And the peak of that pyramid is based on the depth of the foundation that you build. And so like, I've said this before and I'll say it again, but your work works on you more than you work on it.

And so even though you might not be getting paid in the period that you're at, just because you're struggling doesn't mean your family. right and it means and the thing is as long as you're getting better you're making progress and the progress is the success is that you are getting better and like you will turn the corner like that's an inevitability if you put enough time in period i promise you that if you don't stop doing something for 10 years it would be really good at it period and if you're really good at it you'll like doing it ah right and if you like doing it then at that point you won't wonder why your business isn't making money because you'll actually be good and then you won't have these questions but the questions that i get

I would say a third of them come from a very short time horizon. It's like, why am I not a millionaire? It's been 90 days, Alex. What the hell? It's like, well, you didn't put the five years in. So if you're trying to figure out what niche you're going to pick, the point is to just pick and then accept that you're not going to be overwhelmingly successful for like five years. Like, every entrepreneur that I know of puts five years in before anything really happens.

And you're like, fuck, five years. Probably shouldn't tell new entrepreneurs that. Yes, you're going to be very successful very quickly. You should put your job into it. It takes a long time to learn because there's a lot of stuff you got to know. You got to know how to generate leads. You got to know how to work leads. You got to know how to set appointments. You got to learn how to close. You got to learn how to set up bank accounts. You got to learn how to transact. You got to learn how to do billing. You got to do payroll. You got to like, you got to learn how to actually fulfill a product. You got to learn how to learn how to ascend people. You got to learn how to decrease turn. There's a lot of stuff. You got to learn how to recruit. There's a lot of stuff that you got to learn. And so, you know, there's a lot of stuff that you got to learn. And so, So to think that it's somehow going to take 90 days, it's like, why do you think that you can get a chemistry degree in four years and think you can somehow be able to become a master's at entrepreneurship in 90 days? It doesn't give respect to the game. Like, you have to respect the game. Like, a lot of people have been playing this for 40 years. No one's getting their master's degree for 40 years.

Well, some PhDs are, right? And they're probably pretty good at whatever their thing is. Right? And so it's like to think that you're going to beat guys who've been playing the same game for 40 years when your first try in 90 days doesn't respect the game. And so, like, I was fortunate that I started young. I started when I was 23. I mean, the only thing I could have done before that, without doing that is just start instead of going to college, right?

But you have to put your time under the bar. Like, your legs aren't going to grow until you, like, you can't do four squat workouts and expect your legs to grow. You'll get better at squatting. And that getting better at squatting is a requisite for having bigger legs, but you still got to put the volume in. There's a depth of understanding that happens with volume that people cannot appreciate. like Napoleon said,

quantity has a quality all of its own, right? You've got to do the boring work, and you've got to love the boring work. And if you can do that, you won't lose. Because the only person who's injecting this artificial timeline on you is you. And so anyways, it was like one of the number of questions

that I was getting in my comments and stuff is like, how do you pick the niche? How do you know where to start? Like, you don't know where to start. You just start, and then you start accumulating knowledge, and then you will learn. It's like reading books on sales before you've actually had a sales.

I'm actually very against it. I think you should start selling and then read books on sales because then the books will actually make sense to you. Right? Like trying to read 100 books on entrepreneurship before you've actually had a business is silly. Start a business. How do you start a business? Get a bank account, get an LLC, and you figure out what you're going to stop.

Like that's what you do. That's how you start a business. So it's going to start with promotion and selling because you can't even have the rest of the stuff until you learn how to do that. And if you don't know what you're selling, it's because you probably aren't going to do the thing yet. So you got to go, like, get some industry experience, right? That's why banks, by the way, they don't loan to people who don't have industry experience.

So if you're like, hey, I want to get a loan to, this was actually a story I heard from, from my gym owner who ended up working with us for a period of time in gym launch, was he wanted to start a gym and get a loan from the bank. And he went to like 10 banks and they all said no. And he said, and he said the reason was because he did not experience. So what he did was he went to Bally's and worked at Bally's for. like three or four years and worked his way up to he became the personal training manager and then at that point started his gym and he didn't even need the bank loan at that point because

he'd saved some money and he learned how the business worked and lo and behold he was like that was some of the best advice ever had so sometimes you just got to get the industry experience people just want to skip to the last step when like there are prerequisites to getting there which is probably prerequisites exist so um this is uh hopefully the the real answer to how to pick your niche which is like You just need to do something that is at least not, you're not repelled from, that you see people making money in, and then stick with it for an inordinate amount of time without convincing yourself that you're smarter than you are, which is a loose paraphrasing of a Twitter quote that I can't remember who wrote it.

So anyways, if you're new, I don't know if I said in the beginning, but my name's Alex from Mosey, own acquisition.com. You're about $85 million a year. And this is your first video, Walter in the Mosey Nation. I'll see you next bit. Bye.